Argentina's President Cristina Fernandez holds her hand to her chest as she acknowledges supporters after entering the chamber of the Argentine National Congress in Buenos Aires, Argentina, Friday, March 1, 2013. Fernandez was on hand to inaugurate the 2013 legislative year. (AP Photo/Victor R. Caivano)— AP

Argentina's President Cristina Fernandez holds her hand to her chest as she acknowledges supporters after entering the chamber of the Argentine National Congress in Buenos Aires, Argentina, Friday, March 1, 2013. Fernandez was on hand to inaugurate the 2013 legislative year. (AP Photo/Victor R. Caivano)
/ AP

Argentina's President Cristina Fernandez waves to supporters after entering the chamber of the Argentine National Congress in Buenos Aires, Argentina, Friday, March 1, 2013. Fernandez was on hand to inaugurate the 2013 opening legislative session. (AP Photo/Victor R. Caivano)— AP

Argentina's President Cristina Fernandez acknowledges supporters after entering the chamber of the Argentine National Congress in Buenos Aires, Argentina, Friday, March 1, 2013. Fernandez was on hand to inaugurate the 2013 legislative year. (AP Photo/Victor R. Caivano)
/ AP

BUENOS AIRES, Argentina 
A New York court ordered Argentina on Friday to explain how it would issue new bonds rather than comply with a $1.3 billion cash judgment to resolve debts unpaid for more than decade.

Two days after a key oral hearing in NML Capital Ltd. vs Argentina, the appellate judges asked just how, when and at what interest rate Argentina would pay installments on these new bonds.

President Cristina Fernandez had long vowed never to pay anything to the plaintiffs she calls "vulture funds," which she accuses of trying to ruin Argentina's recovery from its 2002 economic collapse. But in a speech to Congress on Friday, she endorsed the compromise offer of a new debt swap, which had been floated in December by her Economy Minister Hernan Lorenzino.

She said Argentina would pay the plaintiffs, but at terms no better than those the vast majority of Argentina's defaulted debt holders accepted in two previous debt swaps. Those exchange bondholders agreed to provide Argentina with significant debt relief in exchange for new bonds, which her government has always paid.

"We have rigorously paid everything we've promised," she said. "And we are also prepared to pay these vulture funds, but not at terms that are better than the 93 percent who believed in and supported Argentina," she said.

Friday's court order suggests the appellate judges are at least giving Argentina another opportunity to explain how this might work.

"Because neither the parameters of Argentina's proposal nor its commitment to abide by it is clear from the record, it is hereby ordered that, on or before March 29, 2013, Argentina submit in writing to the court the precise terms of any alternative payment formula and schedule to which it is prepared to commit," the order reads.

The order further requires that Argentina explain "(1) how and when it proposes to make current those debt obligations on the original bonds that have gone unpaid over the last 11 years; (2) the rate at which it proposes to repay debt obligations on the original bonds going forward; and (3) what assurances, if any, it can provide that the official government action necessary to implement its proposal will be taken, and the timetable for such action."

The case revolves around clauses in the original 1990s bond contracts that promised "equal treatment" for all bondholders. U.S. District Judge Thomas Griesa ruled that the plaintiffs, who refused to accept the previous swaps, deserve 100 percent of face value plus interest on the defaulted debt, in part because they have had to spend millions on litigation in a thus-far fruitless effort to force Argentina to pay.

And Griesa proposed an unprecedented mechanism for forcing Argentina to pay: using the U.S. funds transfer system to reroute the payments Argentina has faithfully made to all the other bondholders if it hasn't already paid the plaintiffs beforehand. That mechanism prompted a flood of legal briefs from U.S. banks, the Federal Reserve, the U.S. government and other institutions, warning that forcing Argentina to pay this way could do serious collateral damage to their interests.